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Goldburd | Goldburd McCone LLP

For nationwide tax guidance, call: 212-302-9400 or toll-free at 844-653-2873.

Serving Individual And Corporate Tax Clients Nationwide From Our New York, New Jersey, Florida And California Offices

Steven Goldburd and Benjamin A Goldburd

Since 1983, our tax firm has skillfully represented individuals and corporations across the United States and around the globe from our offices in New York, New Jersey, California and Florida.

3 things to know about whistleblowers and tax audits

On Behalf of | Oct 31, 2024 | Business Tax, Criminal Tax Issues, Tax Audits

Businesses that face whistleblower claims can find themselves facing huge financial losses. These claims generally involve a former employee or contractor who discloses information that they believe the government could use to build a case against the business for a violation of law. This can extend to include allegations of issues involving tax reporting. These cases are not uncommon, likely at least in part due to the fact that the government has incentives in place to help encourage employees, contractors, and others who may have access to inside information consider moving forward with a whistleblower claim.

#1: The government incentives whistleblowers with the possibility of a huge payout

Few incentives are more motivating than financial gain. If the government can build a successful case off of the information provided by the whistleblower, either in the form of a settlement or ruling in their favor, the government will provide the whistleblower with a portion of the winnings. This can range from 15 to 30% of the proceeds.

#2: The IRS will join a whistleblower claim

The federal agency has joined many whistleblower claims. In fact, from 2017 through 2021, the federal agency paid out almost $600 million in whistleblower awards. These awards were a small portion of the almost $3 billion the IRS collected as a result of joining whistleblower claims.

Experts within the field project these statistics will continue to increase. According to a recent report from the Treasury Inspector General for Tax Administration (TIGTA) the IRS could pull in even more funds from these cases. The report called on the IRS to conduct internal audits to better ensure it is using the whistleblower program to its full potential. Based on its data, the TIGTA believes the IRS could be moving forward with even more fruitful claims.

#3: Defenses are available

Business owners who find themselves facing an audit due to allegations connected to a whistleblower claim have options. Defenses are available, and they can include attacking and discrediting the allegations.

Legal counsel like the experienced attorneys at Goldburd McCone can review the allegations and tailor a defense strategy to your specific situation — better ensuring your rights and reputation are protected throughout the process.